Sino-American relations are, once again, in a downswing. Beijing objected to US President Barack Obama’s receiving the Dalai Lama in the White House, as well as to the administration’s arms sales to Taiwan. There was ample precedent for both US decisions, but some Chinese leaders expected Obama to be more sensitive to what China sees as its “core interests” in national unity.
Things were not supposed to turn out this way. A year ago, the Obama administration made major efforts to reach out to China. US Secretary of State Hillary Clinton referred to “being in the same boat,” and that China and the US would “rise and fall together.” US Treasury Secretary Timothy Geithner said he spent more time consulting his Chinese counterparts than those in any other country. Some observers even referred to a US-Chinese “G2” that would manage the world economy.
The G2 idea was always foolish. Europe has a larger economy than both the US and China, and Japan’s economy is currently about the same size as China’s. Their participation in the solution of global problems will be essential. Nonetheless, growing US-Chinese cooperation within the G20 last year was a positive sign of bilateral and multilateral cooperation.
Whatever the concerns regarding the recent events related to the Dalai Lama and Taiwan, it is important to note that the deterioration in US-Chinese relations began beforehand. Many US members of Congress, for example, complain that US jobs are being destroyed by China’s intervention in currency markets to maintain an artificially low value for the yuan.
A second issue was China’s decision not to cooperate at the UN conference on global climate change in Copenhagen in December. Not only did China resist measures that had been under negotiation for the preceding year, but Chinese Premier Wen Jiabao’s (溫家寶) decision to send a low-level official to meet with and point a finger at Obama was downright insulting.
China behaved similarly when the five permanent members of the UN Security Council (plus Germany) met to discuss sanctions against Iran for violations of its obligations to the International Atomic Energy Agency. Again, China sent a low-ranking official.
What happened to those promising early signs of cooperation? Two reasons for the change in Chinese behavior — seemingly inconsistent at first glance, but in fact perhaps mutually reinforcing — seem possible.
First, a political transition is expected in 2012, and, in a period of rising nationalism, no Chinese leader wants to look softer than his rivals. This helps to explain the recent crackdowns in Tibet and Xinjiang, as well as the detention of human rights lawyers.
In addition, China may be approaching an economic transition. Some Chinese argue that anything less than 8 percent growth would be inadequate to ensure sufficient job creation and fend off social instability. But, as the US’ savings rate begins to rise, China’s export-led growth model, which has promoted employment in China at the cost of global trade imbalances, may no longer be possible. If China responds to entreaties to revalue the yuan, it may need to look tough on other issues to appease nationalist sentiment.
The second cause of China’s recent behavior could be hubris and overconfidence. China is justly proud of its success in emerging from the world recession with a high rate of economic growth. It blames the US for producing the recession, and now holds some US$2 trillion in foreign-exchange reserves.
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